Sunday, June 24, 2018

Betfred Founder Gets £10.2 Million Dividend as Company Faces Shop Closures and Lay-Offs

Betfred founder Fred Done received a £10.2 million dividend, as the company is gearing up for massive lay-offs and betting shop closures following the UK government’s recent announcement that it intends to crack down on the nation’s gambling machines sector.

Betfred reported a pre-tax loss of £18.1 million for the year ended September 24, 2017, down from a £32.4 million pre-tax profit from the previous year. Despite the decline, Mr. Done, whose net worth is estimated to be around £1.4 billion, received the same dividend as he did a year earlier.

Mr. Done and his brother, Peter, founded Betfred back in the 1960s. The bookmaker has grown into one of UK’s largest privately-owned gambling companies since then. It currently operates the nation’s third largest chain of betting shops with a total of 1,666 facilities.

The UK government confirmed last month that it would crack down on the highly controversial fixed-odds betting terminals by cutting the maximum stake the machines accept to just £2 from £100. The announcement caused a wave of protests from industry stakeholders as the maximum stake reduction would cost operators of such devices, Betfred included, hundreds of millions of pounds of gross gambling yield.

Mr. Done said last month that the crackdown could force them to close around 900 of their high street betting shops and lay off up to 4,500 workers. Reports emerged last month that the businessman was considering a judicial review in a bid to overturn the government’s decision to roll out a clampdown on the machines that campaigners have been describing as the “crack cocaine of gambling”.

Following last month’s announcement, Betfred Managing Director sent an email to staff, urging them to lobby MPs to oppose the crackdown, as the reduced stake would have a major impact “on the viability of a number of [the company’s] shops”.

It was understood earlier in June that under a reported agreement between the UK government and bookmakers, the FOBTs stakes might not be reduced before 2020.

Tote Sale

Betfred’s operations also include an online gambling platform, which the company will probably seek to boost in an attempt to offset the losses incurred by the FOBTs clampdown, as well as the Tote racing pool business.

The bookmaker acquired that latter business in 2011. The deal came with a seven-year monopoly over the provision of pool betting services across British racecourses. The monopoly expires this year and another operator, Britbet, is expected to assume control of racecourse pools across 55 major courses.

Reports surfaced earlier this year that Mr. Done was looking to sell the business and a deal was announced earlier this month. Betfred agreed to sell its pool betting operation to the Alizeti consortium, which includes racecourse owner and breeder Alex Frost. The consortium took an initial 25% share in the business with an option to buy the remaining 75% within the next three to five years. The deal could be worth around £150 million.